Expeditors ends year with a whimper

Wednesday, February 27, 2013

Expeditors International turned in lackluster numbers for the fourth quarter of 2012, seeing $84.2 million in net earnings during the fourth quarter of 2012, a year-over-year decrease of 9 percent.
Net revenues fell 4 percent, year over year, to $458.7 million.
For the full year, earnings were down 14 percent when compared to 2011, ending at $333 million. Operating income and total revenues were also down compared to 2011, ending the year down by 14 percent and 3 percent, respectively.
Expeditors saw an air freight yield of 22 percent during the quarter, the lowest since the fourth quarter of 2009. Air freight net revenue declined 10 percent to $154.4 million, but volume was up 5 percent year over year.
On the ocean side, net revenue increased during the quarter by 0.5 percent to $108.1 million, but volume was down, year over year, by 6 percent. According to BB&T Capital Markets, these results were due to aggressive price increases by ocean carriers; analysts said these increases are likely to continue in 2013.
All things considered, Expeditors Chairman and Chief Executive Officer Peter Rose sees the results in a somewhat positive light.
“The market has been challenged throughout the year by air carriers reducing capacity to optimize their pricing and load factors as market volumes declined, primarily in the hi-tech and computer industry, traditionally among the prime users of airfreight space,” Rose said in a statement. “As airfreight tonnage spiked during the latter part of the fourth quarter, carriers imposed rate increases so quickly that we were unable to commercially adjust our corresponding sell rates to avoid temporary yield declines. That all said, we still have much to be proud of this year.”
Rose pointed to the company’s strong cash flow and operating margin as reasons for celebration. He also explained that the company’s streamlined hiring practices, which were implemented early last year, put off the need for layoffs in 2012. - Jon Ross